Recapture Tax Reimbursement Plan
Florida Housing would like to announce an exciting new benefit for our borrowers-Recapture Tax Reimbursement. This feature will offer the added benefit of reimbursing our borrowers the full amount of any Federal Recapture Tax that is owed and paid upon selling or disposing of their home.
We are offering this benefit because the Federal Recapture Tax is complex and often causes our borrowers undue concern and worry. By offering this reimbursement program, Florida Housing is removing one more roadblock to homeownership.
- We have listed below answers to the most commonly asked questions regarding the Recapture Tax Reimbursement Plan. If you have additional questions, please contact Single Family Program staff at (850) 488-4197. We will be happy to discuss this plan with you.
What is the Federal Recapture Tax?
Florida Housing’s First Time Homebuyer Program is funded through the issuance of tax free mortgage revenue bonds. By using our programs, borrowers are receiving the benefit of a lower interest rate than the private market offers. This benefit is “recaptured” in certain instances, through higher federal income taxes in the year you sell or otherwise dispose of your home. For more in depth information click on IRS links above.
What causes the Federal Recapture Tax to “Kick-In”?
In order for you to be subject to the Recapture Tax, ALL THREE OF THE FOLLOWING CONDITIONS MUST APPLY:
- You sell or otherwise dispose of your home within the FIRST NINE (9) YEARS of closing your mortgage loan.
- In the year you dispose of your home, your income has increased and exceeds the IRS established limits.
- You have a “net” profit from the sale.
You must complete IRS Form 8828, Recapture of Federal Mortgage Subsidy, to determine if you owe the Federal Recapture Tax.
Frequently Asked Questions
When do I pay the Federal Recapture Tax?
If you meet all three conditions and are subject to the Recapture Tax, payment is made when you file your taxes for the year in which you sell or otherwise dispose of your home.
Does Florida Housing’s Recapture Tax Reimbursement plan mean I do not have to pay the Federal Recapture Tax?
No. You are still responsible for accurately paying any and all taxes to the IRS. Florida Housing will reimburse you for the actual amount of the Recapture Tax you owe and paid.
What are the guidelines to be eligible for reimbursement?
- Your loan was financed with Florida Housing’s qualified mortgage revenue bonds beginning with the 2007 Series-1 bond issue.
- You submit the Florida Housing Request for Recapture Tax Reimbursement form together with the supporting documentation.
You must submit the request for reimbursement no later than December 31st of the year the Federal Recapture Tax is owed and paid. For example, if your home is sold in 2007, the tax return is filed in 2008. The request for reimbursement must be submitted no later than December 31, 2008.
How do I apply for reimbursement?
It’s simple. Fill out the Florida Housing Request for Recapture Tax Reimbursement form and provide the following documents:
- A signed copy of your Federal Tax return that has been filed showing payment of the Recapture Tax.
- Proof those taxes have been paid, such as a copy of a cancelled check or bank statement.
- A completed and signed IRS Form 4506, Request for Copy of Tax Return.
- A copy of IRS Form 8828, Recapture of Federal Mortgage Subsidy.
- A copy of your HUD-1 Settlement Statement showing the sale of your home.
Mail the above documents along with completed Florida Housing Request for Recapture Tax Reimbursement form to:
Florida Housing Finance Corporation
C/O Single Family Bonds Program
227 North Bronough Street Suite 5000
Tallahassee, FL 32301
ATTN: Recapture Tax Reimbursement